Tax Tips: Can I deduct my cash donation to a charity?

The IRS has decided to get tougher on donations of money to charity. No longer can you give cash to a charity and just tell the IRS how much you gave. If you get audited, you'll find that your cash contribution is not allowed as a deduction unless you've got proper documentation.

When donating to a charity, your first step in taking a tax deduction is making sure that you're giving to a qualified charity. While collections for sick neighbors or terminally ill co-workers are nice to participate in, your contributions to them will not create a tax deduction. The IRS has an official list of organizations that are considered qualified charities in Publication 78, and only donations to those organizations can be deducted on your taxes.

Your next step is to determine whether or not you're receiving any benefit from your money. Fundraisers with things like raffle tickets or candy bars aren't a charitable contribution, because you're receiving a benefit from your money. You might be able to take a deduction if the money you give exceeds the fair market value of what you get in return, but you have to be careful.

Your final step is to get a receipt for your donation. Without it, your deduction is not allowed. Even those "cash" gifts to charity must be supported by some documentation, such as a canceled check, a bank statement, or a credit card statement. If you give the green stuff, you better get a written receipt or it doesn't count. More details can be found in IRS Publication 526.

Generally, when you give money to a charity, you can use the amount of that donation as an itemized deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

Married couples have the option to file jointly or separately on their federal income tax returns. The IRS strongly encourages most couples to file joint tax returns by extending several tax breaks to those who file together. In the vast majority of cases, it's best for married couples to file jointly, but there may be a few instances when it's better to submit separate returns.